Citrix 2007 Annual Report Download - page 28

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Our success depends, in part, on our ability to anticipate and address these risks. We cannot guarantee that
these or other factors will not adversely affect our business or operating results.
Our proprietary rights could offer only limited protection. Our products, including products obtained through
acquisitions, could infringe third-party intellectual property rights, which could result in material costs.
Our efforts to protect our proprietary rights may not be successful. We rely primarily on a combination of
copyright, trademark, patent and trade secret laws, confidentiality procedures and contractual provisions to
protect our proprietary rights. The loss of any material trade secret, trademark, trade name, patent or copyright
could have a material adverse effect on our business. Despite our precautions, it could be possible for
unauthorized third parties to copy or reverse engineer certain portions of our products or to otherwise obtain and
use our proprietary information. If we cannot protect our proprietary technology against unauthorized copying or
use, we may not remain competitive. Any patents owned by us could be invalidated, circumvented or challenged.
Any of our pending or future patent applications, whether or not being currently challenged, may not be issued
with the scope we seek, if at all, and if issued, may not provide any meaningful protection or competitive
advantage.
In addition, our ability to protect our proprietary rights could be affected by:
• Differences in International Law; Enforceability of Licenses: The laws of some foreign countries do
not protect our intellectual property to the same extent as do the laws of the United States and Canada.
For example, we derive a significant portion of our sales from licensing our packaged products under
“shrink wrap” or “click-to-accept” license agreements that are not signed by licensees and electronic
enterprise customer licensing arrangements that are delivered electronically, all of which could be
unenforceable under the laws of many foreign jurisdictions in which we license our products.
• Third Party Infringement Claims: We may become increasingly subject to infringement claims and
claims alleging the unauthorized use of a third-party’s code in our products including the unauthorized
use of open source code that may impose unwanted obligations on us. This may occur for a variety of
reasons, including the expansion of our product lines, such as our Application Networking products
and our Online Services division products, through product development and acquisitions, including
our acquisition of XenSource in 2007, and the increase in the number of competitors in our industry
segments and the resulting increase in the number of related products and the overlap in the
functionality of those products, and the unauthorized use of third-party’s code in our product
development process. Companies and inventors are more frequently seeking to patent software and
business methods because of developments in the law that could extend the ability to obtain such
patents. As a result, we could receive more patent infringement claims. Responding to any
infringement claim, regardless of its validity, could result in costly litigation or injunctive relief or
require us to obtain a license to intellectual property rights of those third parties. Licenses may not be
available on reasonable terms, on terms compatible with the protection of our proprietary rights, or at
all. In addition, attention to these claims could divert our management’s time and attention from
developing our business. If a successful claim is made against us and we fail to develop or license a
substitute technology or negotiate a suitable settlement arrangement, our business, results of
operations, financial condition and cash flows could be materially adversely affected.
If open source software programmers, many of whom we do not employ, do not continue to develop and
enhance the open source Xen hypervisor, we may be unable to develop new XenServer products, adequately
enhance our existing XenServer products or meet customer requirements for innovation, quality and price of
these Xen products.
We rely to a significant degree on an informal community of independent open source software
programmers to develop and enhance the Xen hypervisor. A relatively small group of software engineers, many
of whom are not employed by us, are primarily responsible for the development and evolution of the Xen
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